India Would Rather See Doha Round Fail Than Accept Bad Deal, Trade Official Says

NEW DELHI - As fundamental differences continue to stall progress in the World Trade Organization's Doha Development Round of trade talks, a senior official from the Indian Ministry of Commerce and Industry said March 20 that India would rather see the talks fail than accept an agreement that went against its interests.

"No deal is better than a bad deal," Gopal K. Pillai said at a workshop co-hosted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Centre for Trade and Development.

Top trade officials from the United States, the European Union, Japan, Brazil, India, and Australia ended two days of talks in London on March 11 without any narrowing of differences on key issues. The absence of progress at the London meeting raises fresh doubts about an end-of-April deadline for finalizing the framework for a deal on agriculture and nonagricultural market access.

Pillai, who is involved in the Doha Round negotiations on behalf of India, acknowledged that the global trade talks, "in a sense, have slipped a bit." But, he told BNA, "We will have a clear picture by the end of April. Let the pressure build."

No Linkage on Flexibilities

"Developed countries have once again come back to their pre-Hong Kong position; they have hardened their stand," said Vivek Bharati of FICCI, referring to the WTO's Hong Kong ministerial conference held last December. "It appears that the 30th April deadline may not be met."

Bharati said developed countries now maintain that certain concessions, or "flexibilities," for developing countries outlined in Paragraph 8 of the August 2004 Framework Agreement should be linked to the latter's willingness to cut import duties. He said developing countries should refuse to accept this linkage, adding that the "stand-alone nature of Paragraph 8" must be protected.

Developed countries are in fact maintaining double standards, Bharti said, because they are fighting to protect "stand-alone flexibilities" that would help them to continue to heavily subsidize agriculture.

Keeping 'Development' in Doha

Developing countries must ensure that whatever agreement emerges helps to lift the world's poorest nations out of poverty, delegates told the workshop on March 20.

"If we lose sight of development, this round is meaningless for developing countries," said Prabhash Ranjan of the Centre for Trade and Development.

Ranjan noted that the Doha Round was sold to developing countries as a "development" round--one that would significantly strengthen their economies. Outlining India's priorities in trade in nonagricultural products, he said two things needed to be done. First, a new global trade agreement should prevent tariff peaks and escalations in developed countries so as to increase market access for goods exported by developing countries. And secondly, the latter must retain some domestic "policy space" to decide the manner and pace of tariff reductions. He said if these countries were to quickly reduce tariffs completely, they would "give away a fundamental and sovereign tool."

ABI Formula

Ranjan argued that the tariff reduction formula favored by Argentina, Brazil and India, the so-called ABI formula, was really a "modified Swiss Formula" but one that took into account the average tariff rates of individual countries. He said this formula would help to achieve a "pro-development" outcome by helping to reduce tariff peaks in developed countries. He said it would also help to ensure "less than full reciprocity" in tariff cuts by developing countries. Speakers at the workshop said this principle, although it was now being questioned by developed countries, had been broadly accepted in the run-up to Hong Kong.

The ABI formula would require greater reductions on tariffs that are higher than a country's overall average bound rate and lower reductions on tariffs below the average bound rate. Recent WTO "scenarios" show that the use of the ABI formula would mainly benefit high-tariff developing countries such as India to the detriment of lower-tariff countries such as Malaysia.

Call for Analytic Aid

A.N.P. Sinha, additional secretary at the Ministry of Food Processing Industries, said the challenge for India was not so much one of deciding its overall strategy in WTO negotiations but of working out "crucial details" of a trade agreement. He said the government did not have enough baseline and other data and invited industry groups and other organizations to help Indian negotiators bridge the information gap.

R.S. Seshadri, director of United Riceland Pvt. Ltd., said his firm along with other exporters of Indian basmati rice had worked closely with government officials. This, he said, had helped to win numerous battles against U.S. firms trying to export what they called basmati rice to countries in Europe, the Middle East, and elsewhere. Seshadri noted, however, that this type of government-industry cooperation was extremely rare in India but common in the United States. He said more Indian industry groups needed to partner with the government to help ensure a better trade deal for themselves and the country.